100 Thoughts on Pricing: #20

Compounding 5% annual inflation on long-term projects means you believe inflation 3 years from now will be 2-3x higher than it was 3 years ago and the 20-30 years before that. If that seems ultra-aggressive to you, consider tapering inflation back before then to longer-term rates, or cutting it off at a certain year and subjecting the out years to an index. And if you're really bullish on inflation over the next 3-5 years, you really should instead zero out inflation in your pricing and subject all future years to a CPI index.